Cloudy Outlook as Sales Fall Across the Board
U.S. auto sales fell sharply in the second quarter – to no one’s surprise – as the industry provided its first detailed look at the toll on consumer demand exacted by the coronavirus, reports Automotive News. Against the backdrop of a gradually reopening economy and surging COVID-19 cases in many states, declines ranged from 28 percent to 50 percent among the biggest automakers, some of which are providing their first sales update since early April. Two companies that still report monthly, Hyundai Motor America and Toyota Motor, tallied second-quarter declines of 24 percent and 35 percent, respectively. The industry enters the second half of the year with a dramatically different mindset than six months ago. At that time, when reports of a deadly virus were first trickling out of China, the more optimistic estimates held a chance for a sixth straight year of U.S. light-vehicle sales above 17 million. Read more here.
Senators Seek Details About Trade Officials Who Sought Clients
Two senators asked the top U.S. trade official for details about officials who allegedly sought private-sector consulting work while still government employees and said the episode raises questions about policies at the Office of the U.S. Trade Representative, reports Bloomberg. “Americans deserve to know that their trade policy is made in the public interest and not for private gain,” Democrats Bob Menendez, of New Jersey and Sherrod Brown, of Ohio, said in a letter Wednesday to U.S. Trade Representative Robert Lighthizer. Lighthizer told lawmakers June 17 that he was troubled to learn of the workers’ actions. He said the two were career officials, and that he was told that civil servants were permitted to pursue such activities as opposed to political appointees. The activity had been run through his office’s ethics officials, he testified. Read more here.
New Trade Agreement Means Steep Learning Curve for Auto Industry
Imagine being asked to bake a cake but not being told what kind of cake you'll be baking and knowing you'll be judged on the results. You might know you need milk, eggs and flour, but whether the cake needs to be chocolate or carrot is pretty important, too, and will change what you pick up during your shopping trip. The Detroit Free Press reports that's how Kristin Dziczek, vice president of the Industry, Labor & Economics Group at the Center for Automotive Research in Ann Arbor, described the roll-out of the new trade deal replacing the North American Free Trade Agreement, or NAFTA. The new agreement, one of the biggest milestones of Donald Trump's presidency, took effect Wednesday. There has also, however, been uncertainty as the date of implementation has approached for the United States-Mexico-Canada Agreement. Some of the specifics involving, for instance, labor value content rules, were just finalized and released in recent days. Read more here.
Tesla Tops Toyota as World's Most Valuable Automaker
The extended run up of Tesla’s stock carried it past its Detroit rivals some time ago, but the push into its current territory above $1,000 a share has helped it topple Toyota as the world’s most valuable automaker, reports The Detroit Bureau. Tesla shares jumped 3.7% in trading Wednesday, meaning its market capitalization exceeded $207 billion, surpassing Toyota’s nearly $202 billion. The stock was trading in the $1,118 to $1,120 range midafternoon. It opened today at $1,083 a share. The latest push comes after it was revealed that Chief Executive Officer Elon Musk emailed employees, imploring them to put on a big push at the end of the quarter and that could help the California-based EV maker break even for the second quarter — a result other automakers might actually kill to replicate. Tesla’s not been the only example of strong results for the battery-electric crowd. Potential rival Nikola Inc. saw its market cap exceed that of Ford Motor Co. Read more here.
Daimler CEO Warns of 'Drastic' Pay Cuts and Deeper Restructuring
Daimler AG Chief Executive Officer Ola Kallenius said the maker of Mercedes-Benz cars and the industry as a whole faces painful cutbacks to overcome the economic fallout of the Covid-19 pandemic, reports The Detroit News. The virus outbreak will force manufacturers to do more significant restructuring than they planned before the crisis erupted, Kallenius said Wednesday during a webcast hosted by the German manufacturer’s main labor union, IG Metall. The “significantly harsher reality” for the industry following Covid-19 will necessitate “drastic” salary cuts, with Daimler executives facing bigger reductions than rank-and-file workers, Kallenius said. The adjustments are necessary to protect Daimler’s financial condition and safeguard huge investments in future technologies, he said. Read more here.
Webinar: An Update on COVID-19's Impact on U.S. Auto Sales
Cox Automotive Senior Economist Charlie Chesbrough returns to AutoTalk for an update on July 9 at 2:00 p.m. EDT. Topics to be reviewed include:
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Economic forecast and impact going into the third quarter
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Consumer sentiment and buying behaviors
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Stock market, interest rates, and employment
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An outlook for vehicle sales
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Current view of new and used retail sales and price
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Remember the Plymouth Prowler? Looking Back on the Unlikeliest Car of the '90s [MotorTrend]
Driving Older Cars: Light on Tech, Heavy on Fun [NY Times]
EV Maker Byton Halts Operations for 6 Months as it Faces Financial Woes [Autoblog]
